Buses provide an untapped opportunity for startups

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Introduction

Public transportation is one of the most essential tenets of sustainable cities. A better transportation system cannot just have positive impact towards a greener planet, but also in productivity and happiness.

Even though this is well-known, the fact remains that a lot is to be done. The world is grappling with traffic issues, from Bangkok to Los Angeles.

In India, the central and state governments in the recent years have put emphasis on metro rail projects in the recent years. Bangalore, Pune, Hyderabad, Lucknow, Jaipur are all getting new metro rail systems. The effects of the wide network coverage, however, will only be seen after several years.

For example, the majority of the proposed Mumbai Metro Rail Network will not be ready before 2024. Until then, the construction is only going to put additional pressure on the city. Road closures, air pollution caused by dust, noise pollution, etc. are all visible to naked eyes.

While these giant projects are being executed, we should also think about fixing the easier transportation systems already prevalent across India.

Buses.

Buses make for 90% of public transport in Indian cities. But 80% of the 35000 operational buses in India are in the big cities. Only 63 of 458 Indian cities with a population of 100,000+ have city buses.

For smaller, rapidly growing Indian cities like Indore, Surat, etc. buses can improve the public transportation drastically. Buses can provide the fastest way to boost these cities.

In particular, Bus Rapid Transit (BRT) routes can provide with a way to jump the system. BRT systems include stations, ticket vending machines, raised platforms and 5- to 12-minute frequencies all day long, pretty much the same features as a rail system. In regions with lower density, BRT systems can fill in the gap where governments are debating investing in metro rails or not. In regions with a higher density, while metro is being constructed, a BRT system could be a band-aid solution.

Unlike metro rail, where density is a major constraint, buses don’t have any such constraint. Depending on the density, you can always increase or decrease the frequency of buses. In numeric terms, the cost of a BRT system is one-tenth of a metro train system. Not to mention the faster implementation, lesser disruptions due to construction and less behavioral changes, BRT systems can have a huge impact.

BRT illustration by Hemant

The best BRT systems in the world are in Bogota, Colombia and Guangzhou, China. The Institution for Transportation and Development Policy (ITDP) describes these as gold standards based on its ranking standard.

Only two Indian cities, Ahmedabad and Indore, satisfy some of the criteria for classification. They are both, however, bronze certified, indicating there is still work to be done. The third Indian city where a BRT corridor is present today, Pimpri-Chinchwad, is not classified as it doesn’t meet its standards.

In Delhi, BRT was implemented over a 3.6-mile long corridor but was shut down in 2017. Lack of proper implementation of a BRT according to standards was the primary reason for the shutdown. The government started on the initiative but rolled back.

We see a similar lack of execution in Pune as well. Only the second Indian city to get a BRT corridor way back in 2006, the city has failed to execute on the promises BRT brought with it. Even after going through a huge initial investment in constructing over 40km long corridor, there are several issues.

Frequent bus breakdowns, lack of buses, lack of punctuality and several other operational reasons contribute to the failure of the BRT. Even though ridership after implementation of BRT grew by 12 to 15 percent, the government has not shown a serious initiative to fix the operational issues.

But what if BRT systems are too costly?

If constructing a BRT system seems too costly, the changes can be made with what is available. For cities with existing buses, increasing punctuality and cleanliness are the easiest things. Introducing more routes, experimenting with frequency and providing more alternatives to individuals is bound to increase ridership.

Public transport is not the enemy, bad public transport is.

People should feel a sense of joy while riding public transport. They shouldn’t look at buses with disgust, but should have a smile on their faces.

This is exactly the kind of work that a private company could solve.

Entrepreneurs, what businesses can you make around buses?

If the government allows private companies to run bus services around cities, they would serve the customers well. At the same time, if enough players enter the market, healthy competition would ensure a drop in fares and a better quality of services.

Free-market theory will find its way.

Startups today are built on the basis of rapid experimentation and innovation. Entirely new business models could come up. What about a bus service which is free for passengers, while the operator earns money through ads? Sound familiar to online businesses?

If a decent service is established, startups have a chance of a high-retention user cohort travelling through their buses each day, something that most startup founders would envy. Though the growth in user base might seem slow, with the right funding, this is a lasting business.

The government could set up guidelines and policies but not bother with the day-to-day of operating a bus company. Just like it sets the framework for telecom and let the private operators battle each other, this will work. By looking to privatize 150 trains and 50 train stations, the government seems to be open to privatization.

Companies like Shuttl are already innovating public transport for the daily commuter. With affordable pricing and a better service, Shuttl is doing a great job of providing good transportation for a daily commuter. Yet, their focus is restricted to only office-commute.

What about others?

This, I think, is a huge, untapped opportunity for entrepreneurs to look into. With 400+ small cities and towns in India, the opportunity to grow is ample.

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